Capital Gains Tax charged at 28% on the sale by a company of any property caught by the ATED charge.

Last month’s Budget contained provisions to expand the scope of these tax charges by lowering the property value threshold at which these charges come into effect from £2,000,000 to £500,000. In the case of two of these taxes, the expansion will be in two phases.

ATED Bands for Residential Properties

From 1 April 2015, a new ATED band will be introduced for properties worth between £1,000,000 and £2,000,000. Properties falling within this band will be subject to an ATED charge of £7,000.

From 1 April 2016, a new ATED band will be introduced for properties worth between £500,000 and £1,000,000. Properties falling within this band will be subject to an ATED charge of £3,500.

There are various reliefs available from ATED, however, if your company owns a residential property that falls within this legislation then it must make an annual ATED return to HMRC by the 30 April each year, even if no tax is payable.

Capital Gains Tax for Residential Properties

Capital Gains Tax will be charged at 28% on properties that are subject to the ATED charge, meaning the extension of this provision will match that of the ATED, covering properties worth over £1,000,000 from 1 April 2015, and properties worth over £500,000 from 1 April 2016.

The charge will only apply to the proportion of the capital gain that accrues after the relevant dates. The legislation governing this has yet to be published, but it seems that there will be some significant complexities in required calculations.

Residential Properties Stamp Duty Land Tax

From 20 March 2014, Stamp Duty Land Tax will be charged at 15% for properties worth over £500,000.

There are already exemptions in place to exempt properties that are used for genuine commercial purposes (such as property development or lending to unconnected third parties) and these will continue to apply, but the lowering of the value threshold will bring more scenarios within the scope of these charges.

For example, if a company owns the property to provide accommodation for employees, the charges may not have been a consideration when only applying to properties worth £2,000,000 or over, but now may become a concern. Care also needs to be taken even if properties are held by companies to be let commercially to third parties if there are significant periods when there is no letting.

If you would like any advice regarding the above article or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856990 orcustomerservice@taxinnovations.com.

On 29 October 2018, the Chancellor set out his budget to Parliament, stating that austerity is "finally coming to an end" as the economic outlook improves, and appearing to spread some of the potential benefits around. The budget offered little in the way of significant overhaul, largely focussing on adjustments to existing reliefs, but what were the actual changes to the UK tax environment?